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Zhumalina
Angelina Asylbekovna
Kazakh
National University named after Al-Farabi
Problems of
corporate governance development in Kazakhstan companies
In the current economic conditions particular importance takes the problem of constructing an
effective model of corporate governance in every modern large organization. At
the same time note that the low quality of corporate governance worsens the
investment climate and hinders to attract external funding. In addition,
corporate governance largely determines the business culture. In this regard,
it is important to identify the major basic stages in the development of
corporate governance in Kazakhstan.
For today the actual problem of corporate business in
Kazakhstan is to improve the quality of corporate governance (CG). To do this,
it is essential to find effective solutions to issues related to the protection
of rights of property owners, balancing the interests of individual companies
and corporate structure as a whole.
Improvement of CG is a multidimensional problem which
requires a comprehensive review. The development of modern CG in countries with
transitional economies, including Kazakhstan, depends on the completeness and
complexity of the solution of the following problems:
1. Adoption of the principles of corporate governance
in Kazakhstan;
2. Improving the governance structure of the company, in accordance with the
principles of CG;
3. Improving the governance of the property as an essential element of CG;
4. Expansion and governance of information transparency of the company as an
important link in the development of CG.
5. The development of the stock market as an essential
link in improving of the market CG is a an important indicator of the level of
development of CG in the country
6. Improving the governance of the interaction of participants of corporate
business on the principles of CG. Settlement of corporate conflicts.
Assertion of corporate governance principles is the
fundamental stage in the development, of CG as well as corporate business
in Kazakhstan. The first step towards this should be the awareness by property
owners and leadership of corporations objective need to strictly follow the
principles of CG to realize the economic content of corporatism in market
relations.
The modern period of economic development of
Kazakhstan is characterized its recognition by the international community as a
country with a market economy. In the Republic formed a new institutional
environment, where the decisive role is played by private property. It exists
in various shapes and forms - from individual to sophisticated corporate in the
form of joint-stock companies with complex organizational structure, various
composition of participants.
Investigation the ways to improve the governance of
economic development in the country at all levels, considering the specificity
of Kazakhstan and taking into account international experience, brings to the
forefront the problem of corporativity and corporate governance. This problem
in concentrated form is reflected in corporate business formation and
development in the country which provides the necessary investment and a
business climate in general, gives a new quality of economic growth in the
country.
Associations of people in organizational groups to
work together implies, firstly, the participation of both physical and legal
entities, such as creating a joint-stock company; secondly, creation the
necessary rules for the conduct of such activities, without which control is
ineffective. Adherence to these principles is becoming one of the key issues
for the efficient functioning of corporations. Large corporate business
structure becomes a powerful industry and inter-industry structures of economic
management of the country. In fact they are supposed to form the structure of
sectoral and cross-sectoral governance in the country.
The relevance of CG is defined by complicating the
relationship between proprietors and managers of enterprises that form the core
of CG. If at the initial stage of market reforms in Kazakhstan are often
combined in one person, but now owners of shares (proprietors), as well as
throughout the "civilized world", are increasingly forced to hire
professional managers. In addition, the complicated relationship between
different groups of shareholders in corporation: small and large, controlling
and a blocking, etc. This whole tangle of relationships should be regulated by the
principles of CG.
The emerging in Kazakhstan a system of CG is characterized by certain features:
- A permanent process of redistribution of ownership
in a corporation;
- Specific motivation of many insiders (managers and
major shareholders) associated with the control of financial flows and the
"output" assets of the corporation;
- The concentration of shares (controlling stake) in
the hands of the directors or the CEO ;
- Week or atypical role of traditional
"external" corporate governance mechanisms (market securities,
bankruptcy, the market for corporate management and control), etc.
A significant drawback in corporate governance is the
absence of equitable representation of members of the corporation. No clearly
defined calibrated system of separation of powers, rights, responsibilities and
functions between the different levels of the control system, as well as
between the parties to the decision making process. This situation is one of
the threats to the economic security of the corporation.
The high degree of centralization of corporate
governance leads to a low level of economic independence divisions of the
corporation. For a such control system
is characterized rigid subordinated submission of the lower-level leadership to
senior managers and indirectly the directors and directly to General Director,
in which they often do not bear the corresponding liability for the results of
economic activity. It is largely an obstacle to the formation and development
of corporate governance.
It is important to realize that CG - it's too
complicated process, hoping that one person can perform equally well all
managerial roles (functions). Each role requires a special style. Roles that
participants of the process of corporate governance have to play are in
conflict. Therefore, one person will never be able to perform them all at the
same time. This a whole tangle of relationships should be regulated by the
principles of CG.
Among the difficulties, encountered in the way of
corporate restructuring, should be called the lack of understanding of many of
their leaders of what constitutes a CG, corporate culture, business ethics,
rules of the economic game, the code of corporate conduct or principles, etc.
A CG in Kazakhstan so far vulnerability in terms of
transparency of ownership. This is manifested in insufficient transparency of
possessive and controlling structures. The opacity of the ownership structure
of companies often does not allow shareholders and potential investors to have
a correct understanding of the mechanism of control, which, of course,
increases their risk of possible involvement in the Kazakhstan projects. Still
fails phase constant struggle for power between different interest groups in
the companies.
Research has shown that many corporations actually do
not belong to the shareholders and groups of individuals controlling the
company through a combination of legal and illegal methods. Often the real
owners generally difficult or even impossible to detect because there are no
register. And, as say Radygin A. and G.
Sidorov “shareholders, who are members of the controlling group, act on a
single scenario developed by the real owners. In this case, the claims to the
actual owners of injury to the ordinary "outsider" is not possible -
the owners are hidden behind many structures.” In other words, a feature of
many corporation of countries with transitional economies has been the
identification control of the controlling shareholder. The reason is that, for
fear of losing control over their capital, as well as control over financial
flows, some proprietors not willing to risk even to delegate operational
management of the corporation.
Therefore it is quite understandable that on the set
of Kazakhstan corporations General Director retains many levers uncontrolled
influence but the control system is authoritarian. As a result, losts the
integrity of the corporation as a coherent totality of human resources, tools
and objects of labor. All this eventually reduces the competitiveness and the
market value of the corporation.
It should be emphasized that the concept of CG makes
sense only if there is a separation of ownership from management and finance
department, at least, certain sources of finance, from the management of the
corporation. Exactly separation of functions of the owner and manager defines
the essence of the modern corporation and necessitates implementation of the
system of CG.
Based on the foregoing, it can be concluded that in
countries with transitional economies and domestic conditions formed a
distinctive model of CG. Call it the CG model of the transition period. In this
model, there are also the owners, and hired managers, but their powers in the
company are not strictly separated.
In this model the transition does not occur directly the
separation of ownership and management of the property. On the contrary, there
is a powerful line: Owner - Board of Directors - Management, part of which
forms the core of management, the company performs as a business function and
control. One of the main drawbacks of this model is that the administrative
core is a kind of internal joint-stock company, a substitute for all the formal
corporate governance mechanisms.
Interests of those who did not get into the core of management, with no
protection. In these circumstances, there is inevitably a continuous struggle
for the interception of the entrepreneurial function, which, in turn, allows to
effectively manage the company even for highly professional management and
create a sustainable competitive advantage.
If we analyze the external factors that would have to
discipline the internal processes of CG, then we have the following picture.
Financial markets are poorly developed in Kazakhstan, ineffective and therefore
stock prices do not reflect the real value of companies. There are no financial
instruments, the yield of which could be taken as a starting point in
determining the discount rate. Because of this, it is very difficult to
determine the value of the company and its dynamics, therefore, virtually no
important disciplining management indicators - the market value of the company
and the market CG and control.
Thus, even if the mechanisms of CG formally created
correctly, they do not work cause of external mechanisms do not discipline the
behavior of shareholders, managers do not stimulate the growth of the share
capital. This finding supports the need to consider all parts of the CG, a
systematic approach to the concept of corporate development in Kazakhstan.
Solving the problems of transition to CG of modern
Kazakhstan is a key character since offers opportunities to attract cheaper
capital, increasing the market value of companies.
Developing a practice of CG should be considered as
part of the overall process of modernization of the country, which covers not
only private but also a public sector, which is one of the really active
partners in corporate structures. It is important to emphasize that this is a
way for solving the problem of creation the strategic management process of
formation of competitiveness of Kazakhstan's economy.
It is necessary to emphasize the importance of the
evolutionary stage formation and consolidation of corporate governance
principles, reflecting different stages of development and maturity of the
corporations and the associated growing domestic needs and external stimuli
debugging corporate mechanisms.
Justifying the need for a radical change in the
mechanism of decision-making in Kazakhstan corporations, use the
recommendations of G. Kleiner, who offers the following structure: each person
involved in the activities of the corporation, is one of the four factors of
production: firstly, workers - work; secondly, the shareholders - financial
capital; third, the control of the enterprise - organizational and technological
factors; fourth, CEO - entrepreneurial activity.
On the basis of this structure is proposed scheme is a
modern model of CG. To implement this scheme is necessary to ensure that all
individual participants (employees, shareholders, managers) the possibility of
democratic representation, coordination and consolidation of interests within
their functional group and between groups - social contract in the interaction
in the decision-making process. In this case, the main direction of the vector
of common interest must meet the interests of the corporation as a whole.
At present, the activities of corporations regulated
by a variety of instruments such as the Civil Code, the Labor Code, the Law
"On Joint Stock Companies", "On Insolvency (Bankruptcy) of
Enterprises", the documents relating to the statistics, accounting, etc.
In each of these documents allows for the selection of certain administrative
or organizational decisions. And this is an opportunity for unscrupulous
businessmen to seize weak enterprise through bankruptcy, cheating partners,
violation of the rights of employees and shareholders.
In Kazakhstan, the current stage of development of
business should be held under the slogan of corporate development and
full-scale development of corporate governance principles at all levels of
government. To implement this concept, it is necessary:
1.To transfer from the model of
CG transition period to a modern model based on international principles of its
construction. The proposed model of CG presupposes the existence of effective
securities market and a such important and disciplining management indicators
as the market value of the company and the market CG and control.
2.Prepare and adopt a law
"About Corporation" which defined in a set of basic principles
and norms of its activity as an integrated socio-economic business entity
economy. It is necessary to exclude the possibility of hostile takeovers of
companies, based on different interpretations of the law, through bankruptcy,
cheating partners, violation of the rights of employees and shareholders, ie
raiding and better secure the rights and responsibilities of all stakeholders
CG and corporate business as a whole, its organizational forms.
References
1 Kosolapov GV Economic security and cost management
business // Sayasat, - 2007.- ¹1.-p.26
2 Rodygin A., G. Sidorov The Russian economy: one
hundred years of solitude? // Questions ekonomiki.- 2000.- ¹5 - p.45-61
3 http: / www.vestona.ru/str-sys.htm
4 New Kazakhstan in the new world. Message from the
President of the Republic of Kazakhstan Nursultan Nazarbayev to the people of
Kazakhstan. // Kazakhstanskaya Pravda, 02.03.2007
5 OECD Principles of Corporate Governance. - 2004 -
www.source OECD.org.
6 G. Kleiner Who and how to manage the Russian
enterprises .// Independent gazeta., 2001.- May 8th.
7 See. 1
8 Patyurel R. Creation of network organizational
structures. // Problems of the theory and practice of upravleniya.- 1997.- ¹3-
p. 20.